Decision-time for Landowners in Demchak/Chesapeake Royalty Case
Is the long, sordid affair over Chesapeake Energy screwing Pennsylvania landowners out of royalties finally near an end? Chesapeake and some landowners, part of the “Demchak” class action lawsuit–certainly want you to think so. A year ago MDN told you about a settlement between “several thousand” Pennsylvania landowners and Chesapeake over the royalty issue–Chessy deducting post-production payments by pipeline companies in what some call a scam that leaves landowners signed with Chesapeake receiving royalty checks that are pennies on the dollar compared to what they should receive. The new settlement for those “several thousand” would be 2/3 of $11 million, after the lawyers get their 1/3 cut (see Chesapeake & PA Landowners Settle Royalty Lawsuit…Again). Many PA landowners who are leased with Chesapeake now face a decision–and doing nothing is not an option. The lawyers and the court are about to close the door on what is called the Demchak class action lawsuit. PA landowners with a “market enhancement clause” in their lease should have already received a form letter announcing that unless they opt out of the settlement, they will be included. Below we have an excellent outline of what your options are according to the PA National Association of Royalty Owners (NARO), along with the opinion of one Bradford County landowner who is less than thrilled with the Demchak settlement…
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In March 2014 MDN alerted you to a pitch being made by Gateway Royalty to purchase royalty rights from landowners in eastern Ohio (see 
A complicated court case just decided by Pennsylvania Superior Court has implications for all land and mineral rights owners in PA. The case is called Wright v. Misty Mountain Farm LLC. This is how we understand it. In 1950 Fred and Jeanetta Buck sold some property in Bradford County, PA to Robert and Marjorie Wright. However, the Bucks kept the oil/gas/mineral rights for themselves, having already leased the mineral rights for the property. The mineral rights lease eventually expired in 1971. At that time, Robert and Marjorie Wright, the surface owners, figured with the expiration of the lease, the mineral rights reverted to them–so they signed a lease to allow oil and gas drilling. In 1988 the Wrights signed over the property and the lease to David and Patricia Wright (we’re assuming son and daughter-in-law). David and Patricia signed new leases on the property in both 2001 and again in 2005. Eventually Jeanetta Buck died and in 2010 while reviewing her estate and its assets, Shirley Matthews, administratrix of the estate, discovered/claimed the mineral rights still belonged to the Bucks. So Matthews conveyed the subsurface mineral rights to Misty Mountain Farm LLC. Patricia Wright argued that the when the original lease made by the Bucks in 1950 expired, ownership of the mineral rights also expired–in 1971. A lower court and then the Superior Court disagreed and ruled that unless there is specific language saying that when a lease expires so too do the mineral rights, then the mineral rights still belong to the original rights owner. Whew. Get all that? Bottom line: Just because a lease expires it doesn’t mean the party who owns the mineral rights loses their claim on those rights…
If you stick a cube of sugar in a batch of poison, the poison will still kill you, although it will taste better. Part of PA Gov. Tom Wolf’s poisonous budget that went down in flames last week (see 
An update on a royalty lawsuit we first reported in July. Two Butler County, PA landowners with a combined 245.7 acres of land leased to (and drilled by) XTO Energy have sued XTO claiming the company is breaking the lease agreement by paying royalties below 1/8 of what XTO receives in revenue for the gas (see 
Landowners in Pennsylvania have been upset with shenanigans by Chesapeake Energy in shorting them out of royalties for years. In 2013 a group of landowners in Bradford County, PA filed a lawsuit against Chesapeake over the royalty issue (see 
Pennsylvania landowners Andrew and Sally Dewing signed a 10-year lease for 493 acres of land in Bradford County, PA with Central Appalachian Petroleum in April 2001. The lease was later sold to a consortium including Abarta Oil & Gas Co., Talisman Energy USA and Range Resources. The terms of the lease require rent payments of $5 per acre per year ($2,465) for each year when their property has not be drilled on or under. After not receiving payments on time in 2010, the Dewings served the drillers notice of nonpayment. Eventually the three partners figured out who was supposed to pay and made the payment–but because the payment was late (more than 60 days late), the Dewings claimed the lease was terminated under the original terms of the lease. To make a long story short, Pennsylvania Superior Court ruled last Friday that no, the terms of the lease do not allow the Dewings to get out of the lease because the payment was late…
The McKeesport City Council (Allengheny County, near Pittsburgh) voted Wednesday evening to lease 133.257 acres of Renziehausen Park for drilling under (not on) for Marcellus Shale gas by EQT. The city will receive a $3,000 per acre signing bonus–$400,000 total. No word on what kind of royalty rate they agreed to. The city has been grappling with whether or not to lease the park for more than a year. The vote was 6-1. In typical fashion, one anti-drilling resident attending the meeting wouldn’t shut up and had to be escorted out of the meeting by a police officer. Two other loud mouth anti-drillers continued to spit and sputter and comment from the audience, speaking out of turn (but they weren’t thrown out). Here’s how it went down…
An unfortunate decision in an Ohio court case may have far-reaching implications for Ohio landowners. In Armstrong v. Chesapeake Exploration, L.L.C., landowners Myron and Nikki Armstrong purchased 61 acres of land in Tuscarawas County, OH in 2003 with an existing oil and gas lease (dating back to 1972). After purchasing the property, the Armstrong’s land was pooled into a drilling unit and a well was drilled. We do not know how much (or even if) the well produced in the way of gas and oil. We don’t know if it was hooked up to a pipeline for production. We assume it was hooked up and is producing because the Armstrongs have sued to cancel the lease saying they haven’t received a single royalty check since the well was drilled. Tuscarawas County Court ruled that because there is no express provision in the original lease saying “you can cancel this lease if we don’t pay you the royalties we say we’ll pay you,” the court ruled in favor of Chesapeake and the company that owns the lease and is supposed to pay the royalties–Belden & Blake. The Armstongs appealed the decision to the Ohio Court of Appeals, Fifth Appellate District. That court has just ruled the same way–saying even though royalties haven’t been paid, that’s not a good and sufficient reason to cancel the lease…